- Streamlined, Expedited-up, Prepackaged Chapter 11 to wipe out all common shareholders.
- Individual shareholders were totally caught off guard.
- The game-changer question: what's the value of the company's total assets? Why other shareholders have been so quite?
Exactly three weeks ago, on early morning of June 15, 2020 (EST), while many of investors/shareholders were expecting a 10Q Form for the Fiscal Quarter ended March 31, 2020 and a 10K Form for the Fiscal Year ended March 31, 2020, the company dropped news about the Chapter 11, prepackaged to wipe out all common shareholders. Yes, as “prepackaged”, all common shares will be cancelled. Of course, the company’s management will keep the same around 8% stake in the “new” company; common shareholders were offered about $0.10 on a “take it or leave it” basis. WOW!!!!!!!!!! There’s just no better example to describe the term “a slap in the face” in the world of investment.
According to public information, there were exactly 509 common shareholders that early morning, with the majority of which are institutional shareholders. As individual shareholders, we were totally caught off guard by the company’s Chapter 11 move; after all the good PRs provided by the company in the past few months and even earlier. Two days after the filing, on June 17, 2020, the company asked the court to expedite up their filing. Yes, the company wants it to be a done deal as soon as possible while most of shareholders like us were not aware of it at all. There’s just not much time left for individual shareholders to respond. Individual shareholders like us had so many questions. Many individual shareholders tried to contact the company and all related parties but barely got any meaningful response, if any. Since then, we, as individual shareholders, had no choice but to group up to seek justice for our shareholders’ rights including the ownership and the rights of inspecting the company’s financial, accounting, regulatory and all other related documents.
Our power of numbers grew from single digit in the first 2 days to the current 140 level. We have been extremely ethical from the very first beginning by only including shareholders holding shares as of June 15, 2020 when the company filed the Chapter 11. Yet, the company defined us as “small in $” by calculating our $ power using the current pink sheet price and used it to contest our Equity Committee request. How is that justified? After all shareholders invested tens of millions in the company in the past 2+ years? Most importantly, aren’t all the company’s assets stakeholders’ assets? How could the company exclude 70+ foreign affiliates including the hottest FIGR in the Chapter 11? Especially when those 70+ foreign affiliates generate about 70-80% percent of the company’s billion level revenue? The company had $1.5-$2 billion annual revenue in the past two years.
As a group of individual shareholders, we have some questions to all other shareholders outside of our group:
Were you vaguely or clearly indicated or promised by any individual/organization that you’ll get your money back (reimbursement)?
Were you vaguely or clearly indicated or promised by any individual/organization that you’ll be rewarded upon the company’s “successful” approval of the prepackaged Chapter 11?
If you’re an institution/fund, do you ignore the best interests of your own clients/customers, and/or were you involved with this Chapter 11 the whole time?
If you answered NO to all the three questions above, do you actually know the value of the company? Do you actually analyze/calculate the valuation of the company’s total assets? Do you actually think/believe the company would be short on balance in a freefall or liquidation scenario? Do you know the valuation and/or the price in buyouts/takeovers of the whole company and/or part of the company? This is a legendary US company that built its tobacco empire worldwide in the past 150 years and has been transforming itself to the cannabis/hemp industry with full horsepower. The market share, the profit margin and the grow potential of the company are just right there. In fact, some of us believe the company’s cannabis/hemp business is going to take off while most of us believe it’s taking off already.
As a shareholder, you have the ownership of this company. If you have nothing to hide, time to head up.
A Group of Shareholders
Disclaimer: The author(S) of this letter does not reserve any copyright as long as an individual/organization distributes/conveys the letter as a whole without material change. Editors comments are highly welcomed and feedback from any individual/organization are highly welcomed as well. Please contact us through either the email PYX.shareholders@gmailcom or Twitter @a_pyxus
Analyst's Disclosure: I am/we are long PYX.
A group of shareholders only include individual shareholders holding shares as of June 15, 2020 when the company filed the Chapter 11.
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